Consumer-oriented rewards systems have become an integral part of retail point of sale and internet commerce marketing. Retailers have multiple objectives: to attract consumers to increase the price-point of their purchases; to induce consumers to increase the frequency of their purchases from a particular retailer, and establishing a loyal purchasing pattern by the consumer with that retailer; to increase the number of consumers who purchase from a particular retailer, and to obtain demographic data from consumers about their purchasing. Rewards systems are often customized for each reward provider, hence the recipient must carry a different rewards token for each retailer in order to receive that retailer's consumer incentive rewards. Hence, in addition to their debit and credit cards, consumers are now encumbered with additional cards to carry, all of which can easily be lost, damaged or stolen. After initially signing up with these incentive programs, consumers soon dispense with their incentive cards, therefore, either the consumer incentive program offered by the retailer fails or is not as successful as it was once thought to be.
Such rewards systems may take many forms, such as providing the consumer with immediate discounts on purchased goods, accrued miles on frequent flyer programs offered by airlines, or accrued points towards the purchase of a product.
Additionally, the use of cards by consumers for accessing such rewards systems is costly and disadvantageous. Namely, retailers must absorb the cost of producing such tokens and then distributing them to consumers. Furthermore, as tokens are lost, damaged, or stolen, retailers absorb the cost of replacing the token to the consumer. Further, retailers use these tokens to only identify the consumer's rewards account, rather than being able to identify the consumer directly.
Last, such tokens have additional costs to the retailer in that the desired demographic and purchasing-pattern data can be easily de-linked once the token is separated from the consumer. This occurs because a fraudulent party makes purchases with a token that incorrectly identifies the user's rewards account as the original consumer's, thereby attributing such purchases by the fraudulent party to the original consumer's purchasing profile. At the same time, when the genuine consumer demands their rightful rewards upon making their own purchases without their appropriate rewards token, the retailer must use another, likely generic (e.g., store account), rewards account in order to accommodate that consumer's requirement of benefiting from the incentives rightly due to them based on their purchases. Hence, the retailer's franchise on accurate consumer purchasing patterns can be significantly diluted by such unreliable information, thereby causing the retailer additional losses as their target-marketing campaigns and inventory-efficiency strategies are adversely affected by this inaccurate demographic data.
The use of various biometrics, such as fingerprints, hand prints, voice prints, retinal images, handwriting samples and the like have been suggested for identification of individuals. However, because the biometrics are generally stored in electronic (and thus reproducible) form on a token and because the comparison and verification process is not isolated from the hardware and software directly used by the recipient attempting access, the problem of having to carry cards is not alleviated.
It has also been suggested that smartcards can also be used for tracking the rewards accrued by a consumer. However, smartcard-based system will cost significantly more than the “dumb” card. A smartcard costs in excess of $3, and a biometric smartcard is projected to cost in excess of $5. In addition, each point of sale station would need a smartcard reader. Furthermore, the net result of “smartening” the token is centralization of function. This may look interesting during design, but in actual use results in increased vulnerability for the consumer. Given the number of functions that the smartcard will be performing, the loss or damage of this all-controlling card will be excruciatingly inconvenient for the cardholder. Losing a card full of accrued rewards will result loss of the accumulated rewards.
There is a need for an electronic rewards transaction system that uses a strong link to the person being identified, as opposed to merely verifying a recipient's possession of any physical objects that can be freely transferred.
A further need in an electronic rewards transaction system is ensuring consumer convenience by providing authorization without forcing the consumer to possess, carry, and present one or more proprietary tokens, such as man-made portable memory devices, in order to accumulate the rewards. Anyone who has lost a card, left it at home, had a card stolen knows well the keenly and immediately-felt inconvenience caused by such problems. Therefore, there is a need for an electronic biometric rewards transaction system that is entirely tokenless.
There is another need in the industry for a transaction system that is sufficiently versatile to accommodate both consumers who desire to use personal identification numbers (PINs) for added security and also consumers who prefer not to use them.
Lastly, such a system must be affordable and flexible enough to be operatively compatible with existing networks having a variety of electronic transaction devices and system configurations.